Jollibee profit slips 10% to P4.92B; IT costs weigh

JOLLIBEE Foods Corp. said its net income declined by more than 10 percent last year as its information technology (IT) systems upgrade, as well as acquisitions made during the period, weighed on its profitability.

In a disclosure to the Philippine Stock Exchange Tuesday, the fast food giant said its net income fell to P4.92 billion last year, or 10.2 percent lower than the P5.48 billion recorded in 2014.

Ysmael Baysa, JFC’s chief financial officer, said the company’s earnings were affected by the almost P1 billion expenditure it made for its IT upgrade, the increase in network development organization and the $100 million worth of acquisition of US burger joint Smashburger.

He said JFC also spent for the logistics cost necessary to support its business in the country as its business at home is growing faster than expected.

“These are necessary investments that are helping make possible JFC’s short and long term sales and profit growth. We do not expect the same rate of expense increases in 2016,” he said, adding that the company expects profit recovery starting this year.

JFC said it spent some P903 million for extraordinary items last year, which pulled down its operating income for the entire year.

For the fourth quarter alone, the company’s income fell by nearly half to P961 million from the previous year’s P1.77 billion.

System-wide retail sales, which measure the company’s sales from both company-owned and franchised stores, grew by 11 percent last year to P130.73 billion from the P117.89 billion recorded in 2014.

Last year, the company opened 303 stores, of which 246 are in the Philippines while the rest are overseas, mostly in China, Southeast Asia and the Middle East.

“This is the highest number of store opening in a single year in JFC’s history. The new stores are performing well, particularly those in the Philippines, exceeding their sales and return on investments,” the JFC chief executive officer Ernesto Tanmantiong said.

For its capital expenditure, the company is allocating P10.4 billion for this year, of which P7.5 billion has been earmarked for new and existing stores.

The company said that despite its acquisition of Smashburger, its net cash position has improved to P2.5 billion from the previous year’s P600 million.

As at end-December, JFC had 2,475 stores in the country while 642 stores are stationed overseas, most of which are in China.